The Tenant Farmers Association (TFA) has reacted with dismay at newly released figures showing that security of tenure on agricultural tenancies continues to be in decline.

Statistics released this month by the Central Association of Agricultural Valuers (CAAV) in its annual Agricultural Land Occupation Survey, show yet another worrying decrease in security of farm tenure in 2018 in comparison to the previous year.

The short-term nature of agricultural tenancies is crippling progression, investment, sustainable land use and productivity on farms. With much higher demand for farm land than supply, landlords can offer short-terms, for high rents at very little risk, whilst at the same time pocketing generous and unconstrained tax benefits, which the TFA argues must be addressed.

The CAAV figures report that the average length of term on all FBTs has decreased from what was already a low point in 2017 of just under four years, to below three years in 2018. Excluding lettings of less than a year, the average tenancy length has plunged from just below five years to four years overall.

Most worryingly, fully equipped holdings, which would be expected to be let for longer terms, have seen a reduction to just seven and half years in 2018, slashing by half the length of term seen two years previously.

It is simply unacceptable that 90% of farm tenancies let in 2018 had terms of five years or under, and that 63% of all new lets are offered on the most insecure terms –for less than two years.

TFA Chief Executive, George Dunn, said “These statistics are simply dreadful. Everyone agrees that long-term relationships are the best way to achieve positive outcomes for landlords and tenants. Yet, the market is failing to deliver efficient or sustainable outcomes, in fact, it is going backwards. It is now urgent that the Government steps in to address this major market failure, in a sector that makes up one third of all UK farmland and where FBTs represent about half that area. The best way to do this would be through the taxation environment within which rural landlords make decisions about letting land to encourage longer term FBTs. However, with the Government cancelling next week’s Budget, another opportunity to change this terrible situation will be missed.”

Ref: MR 19/40

Date: 30 October 2019

Notes for Editors:

The TFA is arguing for the following taxation changes:

(a) Restricting the generous, 100% Agricultural Property Relief from Inheritance Tax (currently available to all agricultural landlords, regardless of the length of time for which they let land) only to those landlords prepared to let farmland for 10 years or more (excluding rotationally let land on short terms for vegetable and other high value crops).

(b) Clamping down on those land owners who, through schemes promoted by agents and accountants, are using share farming, contract farming, share partnerships and grazing licences as thin veneers of trading activity and as vehicles for aggressive tax avoidance where they take no risk in the business, have little, if any, entrepreneurial input and lack any management control.

(c) Offering landlords prepared to let farm land for 10 years or more the ability to declare their income as if it was trading income for taxation purposes.

(d) Reforming Stamp Duty Land Tax to end the discrimination against longer farm tenancies.

For further information contact George Dunn on 07721 998961 or Julia Meadows, TFA Communications and Events Co-ordinator, on 0118 930 6130 or 07887 777157